Financial Markets and Institutions

2019-2020

Course Objective

The purpose of this course is to develop an understanding of the
economics underlying financial intermediation, financial markets and
banking, with a particular regard for current market developments and
their consequences.

Course Content

We start by very briefly discussing the traditional role of commercial
banks in the financial system and how banks manage risks. Given that
Finance track students this year will have studied most of this in the
Bachelor course FMI, this coverage will be high over.

Given the depth of the Great Financial Crisis (2007-2009), there has
been a flurry in new regulation. What are the objectives of these
regulations, are these or will these be met. Since traditionally
regulation has been focussed on solvency will dedicate a lecture on
liquidity as well as this has proven to be quite a separate type of
risk. In addition we will discuss macroprudential and systemic risk
regulations.

The next two lectures cover the plumbing of the system and other large
institutional participants. The former lecture will provide us some
understanding of how risks in the system not only originate with the
actions (i.e., trades) but also with the markets are set up. The latter
will discuss how, next to (investment) banks, other large institutional
investors are coming to the fore.

In the final part of the course we will turn to three distinct markets:
the derivatives market, the interbank and the international banking
market. How do these markets operate, particularly in the crisis, and
how are they evolving.

Guest lectures from practitioners will provide more colour: in previous
years DNB
President Klaas Knot covered central bank policy complemented by a
lecture from a practitioner.

Teaching Methods

The lectures will be complemented by a writing assignment (see below)
All information regarding the timetable of the course can be found at
http://rooster.vu.nl.
To facilitate the Writing Assignment a non-compulsory lecture on writing
in English will be organised in the second week. In the second week
there will be an additional non-compulsory lecture to discuss question
for those without a banking background (e.g. business analytics and
econometrics students).
Question should be raised on the web forum.

Method of Assessment

Final grade is based on a closed-book written final exam (80%) and the
grade on an open-book essay to be written in groups of at most three
students (20%). More details regarding the topics and the structure of
the essay will be provided during the lectures and tutorials. If no
essay was submitted, it will be graded 0 (zero), counting as a 0 for the
resit as well. In the case of a resit in later periods (i.e., in 2018 or
later), the essay result will be disregarded and the resit grade will be
based 100% on the examination. The exam questions will cover the topics
and the exercises
treated in the class. The lecture notes and solutions published on
Canvas can be used as a faithful guide for the required material and
level of difficulty.
Part of understanding is being able to present your findings. In many
cases, getting the form right is just as important as the actual
content. Findings can be presented in many ways. For example, as an
academic article, a thesis, a Powerpoint or a column. In this writing
assignment we will aim for a contribution to a policy oriented blog such
as VoxEU (www.voxeu.org). See www.voxveu.org for last year's
submissions. Closer to the course, we will set the
topic for this year´s assignment. The assignment should be written in
groups of at most three. Please use the appropriate sign up tool on
Canvas. Further details will be given in the first lecture. Note that a
non-compulsory lecture on writing in English will be planned in the
first week.
The deadline for the assignment will be announced in the first lecture.

Entry Requirements

Students should be familiar with the material of the bachelor course in
Money and Banking or similar.

Literature

The material from the Bachelor course FMI will be assumed as starting
level. For those wishing to brush up, please go over all of Chapters 8
through 12 from
• Mishkin, F., K. Matthews, and M. Giuliodori, The Economics of Money,
Banking and Finance, European edition.

Several mandatory academic papers will posted to Canvas Lecture notes
will be available on Canvas just before each class. Solutions for all
exercises will be available after lectures.
Other non-mandatory (but useful) materials such as academic papers,
press articles or book titles will be posted on Canvas.

General Information

Course Code E_FIN_FMI
Credits 6 EC
Period P2
Course Level 400
Language of Tuition English
Faculty School of Business and Economics
Course Coordinator E. Karmaziene
Examiner E. Karmaziene
Teaching Staff prof. dr. I.P.P. van Lelyveld
E. Karmaziene

Practical Information

You need to register for this course yourself

Last-minute registration is available for this course.

Teaching Methods Lecture
Target audiences

This course is also available as: